Mr. Shaper: Kinder Morgan is a midstream energy company focused on owning and operating assets, such as pipelines and terminals that are key to transporting energy products across our nation. We were formed in 1997 and have grown tremendously over that time frame, while delivering very attractive returns to our investors. One part of our business, Kinder Morgan Energy Partners, or KMP, is structured as a master limited partnership. We feel this is the most efficient structure in which to own our assets because it eliminates a layer of taxation and allows us to deliver greater value to our investors from these very stable cash flow-generating assets. It also gives us a disciplined structure because we distribute the cash that we generate back out to our partners. KMP is comprised of five business segments: products pipelines, terminals, natural gas pipelines, CO2 and Kinder Morgan Canada.
When we want to expand our assets or buy new assets - and to date, we've invested more than 20 billion dollars in growing the company - we go to investors and seek additional capital to fund our projects. In essence, we are held to a standard of ensuring that we earn on those investments above our cost of capital. In contrast with a C-corp., which may retain cash and then go try to find investments to put that cash to work, we are the opposite. We distribute our cash and then we only pursue an investment when we know that we will earn very attractive returns, and that's been a very a successful structure for us. To date, KMP has grown from an enterprise value of 325 million in February 1997 to an enterprise value of approximately 30 billion.
Tickers included in this excerpt: KMP
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